On the second and final day of EBAday in Lisbon, Portugal, prominent figures from the banking and fintech sectors gathered to discuss pressing issues within the industry. The panel included Erik Frantz, executive director for financial institutions at CaixaBank; Roisin Levine, head of UK and Europe partnerships at Wise Platform; Rafael Linde, head of international development and global relationship management at Cecabank; Dean Sposito, head of institutional cash and trade finance for Western Europe at Deutsche Bank; and Gareth Lodge, senior analyst for payments at Celent, who moderated the session.
The discussion kicked off with a focus on the state of correspondent banking relationships, consolidation, and risk management. The speakers reinforced the need for collaboration between banks and fintech companies, a recurring theme at this year’s EBAday. They also addressed the challenges posed by consolidation and the effects of political events on the sector.
Lodge presented data from the Bank for International Settlements (BIS), revealing a shift among banks away from cross-border payment services due to an unfavorable risk-return dynamic. This trend has led to a decrease in the number of active correspondents and corridors from 2011 to 2022.
Levine noted that this global trend results from the high costs of maintaining relationships. While established networks facilitate real-time payments, she argued that consolidating correspondent service providers for emerging market currencies may simplify operations. She emphasized the importance of preserving currency routes for financial inclusion while optimizing experiences for major currencies.
Levine elaborated on the evolving expectations of retail customers, stressing the need to provide a superior experience that goes beyond just offering less commonly used currencies or competitive pricing.
Linde emphasized the importance of having the right tools, systems, and technology to mitigate risks and highlighted compliance as a critical aspect. Sposito mirrored this sentiment, highlighting the delicate balance between costs and revenues in derisking efforts. He raised concerns about the regulatory landscape and the implications for customer relationships amidst a high number of accounts, urging the industry to reflect on its longstanding practices.
Frantz agreed with the panel’s observations and suggested that in the future, a collaborative ecosystem approach with regulatory agencies could be essential if the risk-reward balance continues to sway unfavorably. He pointed out that while a risk-based regulatory framework prioritizes partnerships with financial institutions, it is equally vital to consider client needs.
In another session led by Elizabeth Lumley, experts discussed cross-border payments, including Marianne DeMarchi from Swift, Vijay Lulla from J.P. Morgan Payments, Emanuela Saccarola from Citi, Fiona Turnbull from NatWest, and Dr. Hubertus von Poser from PPI. This panel further explored the complexities of cross-border payments and emphasized the necessity for standardization and regulatory simplification, advocating for collaborative approaches to address industry challenges.
Focusing on stablecoins and CBDCs, Lulla called for prioritizing customer needs over national interests and described these innovations as “building blocks” for addressing broader challenges. Von Poser examined the competition in the payments landscape and underscored the importance of efficiency, cost-effectiveness, and security in relation to CBDC initiatives.
Turnbull stressed that while speed is often desired, reliability and safety should take precedence. Saccarola mentioned that banks are aligning on goals related to speed, accessibility, and transparency, highlighting a collective agenda for improvement. DeMarchi reinforced the necessity for public and private sector collaboration in providing access to essential digital infrastructure.